Even Needed Planning Not Economist`s Policy

March 29, 1992|By David Warsh, Boston Globe.

Friedrich Hayek, the great foe of government planning, lived a life still not quite fully understood by his friends when he died last week at age 92.

On the surface, his career was supremely, almost uniquely, happy. Late photographs show him smiling, winking, beckoning to the newly privatizing world he had relentlessly imagined. And why not? He outlived not only his antagonists but also their ideas, not only the Keynesian revolution but also the communist revolutions.

It is hard to recall the fury that greeted Hayek`s ``The Road to Serfdom`` when it was published in 1944, when John Maynard Keynes, Joseph Schumpeter, Karl Polanyi, Karl Mannheim and Harold Laski were trumpeting the death of capitalism and the inevitability of planning. Yet Hayek, who was born in Vienna in 1899, lived to be celebrated as the philosopher laureate of the administrations of Margaret Thatcher and Ronald Reagan. His collected papers reveal a remarkable intelligence operating across a wide range of fields.

Deeper, however, this is not an entirely happy story. A measure of this is that Hayek is not to be found in two interesting new books about the institutions in which he spent much of his working life.

``Eminent Economists: Their Life Philosophies,`` edited by Michael Szenberg, contains revealing autobiographical essays by 22 excellent economists of the older generation, including representatives of the right, such as Karl Brunner and James Buchanan. Hayek merits only three entries in the index.

Nor, despite having taught there for 12 years, does he have a place in

``Remembering the University of Chicago: Teachers, Scientists and Scholars,`` 47 biographical essays assembled (and, in some cases, written) by Edward Shils that convey the flavor of that powerful institution.

The point is that Hayek was not a dominating part of the tapestry of either community (though he shared a Nobel Prize with Gunnar Myrdal in 1974). His more direct connection was with politicians and activists, rather than peers.

Why? A clue of sorts was provided last week in a report by a committee of the National Academies of Science and Engineering and the Institutes of Medicine, which called in a clear, cool voice for the government to edge into ... economic planning!

The panel consisted of 15 technology-policy experts, all deployed on the cutting edge of industry, led by Harold Brown, former president of the California Institute of Technology and defense secretary under President Jimmy Carter. At the same time, Business Week magazine renewed its quadrennial call for ``industrial policy`` in a cover story. But the academies` survey is far deeper stuff, a shrewd survey of how and why the American market sometimes fails to achieve the commercialization of technology-and a path-breaking recommendation for a way to remedy the breakdown.

After considering-and rejecting-the idea of a Civilian Technology Agency established in the conventional bureaucratic framework of government, the panel proposed a Civilian Technology Corp. It would act as a kind of Federal Reserve System for innovations in their very earliest stages, a quasi-governmental institution with a chief executive, a board of directors, a non-civil service staff, $5 billion in public money that would be self-replenishing through equity positions, patents and license fees and very little active congressional oversight. The corporation would get a ``civilian patina`` to insulate it as much as possible from pork-barrel politics, said Sen. Ernest Hollings (D-S.C.), chairman of the Senate Commerce Committee and a tireless worker in the technology-policy vineyards who received the report and held hearings on it.

To be sure, the panel comprised mainly the sorts of managers who would be most at home in a Democratic administration. Besides Brown, there were several others who served in the Carter administration, including John Deutch, Richard Cooper, C. Fred Bergsten and William J. Perry. But the group also included Yale`s Paul MacAvoy, a longtime adviser to President Bush, and it is hard to think who in the research-and-development community would oppose strenuously the measure-except, perhaps, longtime venture capitalists who were not represented on the panel and among its presenters.

That leaves a group-many professional economists among it-that would prefer to accomplish the same end of stimulating key technologies with a research-and-development tax credit, especially one designed to permit American corporations to sponsor more work in universities. But as Brown notes, there would then be problems of excluding abuse through cunning definitions-and, even then, the tax credit remains a blunt instrument.

A Bush administration task force might refine the vision of a technology corporation and modify it. But it would be frivolous not to take the gamble and plunge $5 billion in defense savings into the project, in the hope that it would somehow galvanize American industry in the post-Cold War era.